D'Amato Cleared in Roosevelt Raceway Sale

By JOHN T. McQUISTON,

Published: January 14, 1992

MINEOLA, L.I., Jan. 13—
The New York State Investigation Commission said today that it had found no criminal wrongdoing in the publicly financed purchase of Roosevelt Raceway by private investors in 1984 or in Senator Alfonse M. D'Amato's efforts to secure Federal tax relief for the raceway.

The commission's report, issued after an 18-month inquiry, was another victory for Senator D'Amato, who was cleared last August by the Senate Ethics Committee after accusations that he had violated Senate rules and Federal laws to help campaign contributors and political associates.

Mr. D'Amato, who faces a crowded field of Democratic challengers for his seat, said he was elated by the report.

"It basically says that what I did was right and proper in trying to help a development in my state to create jobs," he said.

The investigation was ordered in 1990 by Gov. Mario M. Cuomo following allegations that Senator D'Amato had helped secure a Federal tax exemption for the track's owners in return for $4,800 in campaign contributions and the hiring of his brother, Armand, as the track's legal counsel. No Evidence of Collusion

The commission said it found no evidence of collusion between Senator D'Amato and the track's owners, Roosevelt Raceway Associates, noting that the Senator ultimately voted against a legislative package that included the tax exemption. The commission also concluded that the hiring of Armand D'Amato's firm was not connected to the Senator's initial efforts in behalf of the track owners.

Senator D'Amato, however, is not yet free of official investigations into his activities. Allegations that he performed favors for his brother's law clients remain under investigation by the Justice Department, law-enforcement officials say. Federal prosecutors are examining allegations that real-estate developers and other businesses around the country hired Armand D'Amato's Mineola law firm as a way to curry favor with the Senator.

Senator D'Amato supported Federal legislation in 1984 that would have removed the Federal tax exemption on various industrial development bonds, but included Roosevelt Raceway in a list of continued exemptions. The legislation was approved by Congress, although Mr. D'Amato ultimately voted against it because of certain restrictions on the use of the bonds that had nothing to do with the raceway.

The raceway, once the nation's premier harness racing track, is on 172 acres in the heart of Nassau County. It was sold in 1984 by Madison Square Garden, a subsidiary of Gulf and Western Industries, to Roosevelt Raceway Asssociates, headed by Charles L. Evans, an investment banker and race horse breeder.

The group put up $750,000 and received $52 million worth of financing in the form of tax-free bonds issued by the Hempstead Industrial Development Agency. The track is in Westbury in the town of Hempstead.

Although the buyers had said they intended to continue to operate the site as a race track, they shut it down in 1988, citing falling revenue. At that time, the value of the site as commercial property was estimated at more than $200 million.

Critics charged that Hempstead had been duped and that the buyers had always planned to develop the property as a real-estate venture. Municipal Bond Review Urged

The state commission, in its report, said it had found no evidence that Roosevelt Raceway Associates had "used fraudulent or other criminal means" to obtain the financing. It also said it found "no evidence that any party to this transaction violated any law."

But the commission said it found shortcomings in the way the $52 million in public financing was arranged and it recommended a statewide review of the practices of local development agencies empowered to issue bonds that may be exempt from Federal, state and local income taxes.

"While we were confident that there was no criminal conduct committed, we did see a lot of problems in this particular case," said Donald O. Chesworth, chairman of the Investigation Commission.

He said the Hempstead Industrial Development Agency "was remiss in its obligation to adequately investigate the raceway project prior to approval of the I.D.A. financing."

But he said there was "no basis" to recommend that Governor Cuomo appoint a special prosecutor.

Joseph N. Mondello, the Presiding Supervisor of the Town of Hempstead -- the office held by Mr. D'Amato before he won his seat in the United States Senate -- said today that he was "delighted with the result that there were no criminal or fraudulent actions." 'I See Affordable Housing'

"This now frees governmental officials to be able to deal with Roosevelt Raceway in a way that will benefit the people of this county," he said. "I see affordable housing for senior citizens and other projects that this area needs and would help pull us out of the recession."

But Peter King, a fellow Republican and Nassau County Comptroller, said he remained skeptical of the investors in the raceway.

"The owners may have relied on the letter of the law in this deal, but they certainly were not abiding by the spirit of the law," Mr. King said. "I felt from the beginning, and I still do, that they never intended to run it as a raceway, but to cash in on the real estate."

Besides Mr. Evans, the partners included Barry B. Goldstein, a public accountant, David Stevenson, a former jockey, and William B. Hopkins, the former president of Roosevelt Raceway for Madison Square Garden. Attempt at Development

Jonathan Kantor, a lawyer for the group, said, "My clients welcome being exonerated."

In 1986, as racing revenues were steadily declining, Roosevelt Raceway Associates unsuccessfully tried to develop part of the property commercially. After it tried to sell off part of the site, the Town of Hempstead imposed a moratorium prohibiting development of the raceway.

By early 1987, the continued decline of racing and the failed attempt at partial development caused the partnership to decide to sell or redevelop the entire parcel. It redeemed the development bonds that year and replaced them with private financing. The land, its old raceway and extensive parking lots have remained something of a ghost town.

Despite the recession, the property has continued to increase in value, real-estate brokers say. It is in the middle of a commercial area surrounded by shopping malls, restaurants and small businesses.

Senator D'Amato faces re-election in November. Likely Democratic challengers include former United States Representative Geraldine R. Ferraro, Representative Robert A. Mrazek of Long Island, New York Attorney General Robert Abrams and Comptroller Elizabeth Holtzman of New York City.